Fourth-quarter 2012 results for Marine Harvest show a significant drop in earnings compared to 2011, but executives remain optimistic that a shift in the market that began at the end of 4Q will carry over into 2013 and beyond.
"I am very encouraged by the strong market outlook in Europe, with future prices above NOK 30 (USD 5.46, EUR 4.04) per kilogram for both 2013 and 2014,” said Alf-Helge Aarskog, Marine Harvest’s CEO. “Marine Harvest is well positioned to take advantage of this as 80 percent of our volume will be originating in Europe combined with high exposure to spot prices.”
While the upturn began toward the end of December 2012, it wasn’t enough to rescue the quarter for Marine Harvest. The company showed an operational EBIT of NOK 64 million (USD 11.6 million, EUR 8.6 million), down from NOK 403 million (USD 73.3 million, EUR 54.3 million) in the same quarter for 2011. The seasonal working capital build up in the fourth quarter led to cash flow from operations of NOK -169 million (USD -30.8 million, EUR -22.8 million), compared to -108 million (USD -19.7 million, EUR -15.5 million) in 4Q 2011.
"Although the market for Atlantic salmon in Europe experienced a momentous positive turn from December, the result in the fourth quarter was impacted by a low price realization,” Aarskog said.
Norway, where salmon generates 68 percent of the company’s volume, remained in the black, but operational EBIT per kilogram for Marine Harvest Scotland went from NOK 4.56 (USD 0.83, EUR 0.61) in 4Q 2011 to NOK -1.14 (USD -0.21, EUR -0.15) in 2012. The bad news continued across the Atlantic, with Marine Harvest Canada EBIT coming in at NOK -4.94 (USD -0.90, EUR -0.67) per kilogram, compared to NOK -3.40 (USD -0.62, EUR -0.45) in the same quarter last year. Marine Harvest Chile continued to struggle too, with EBIT per kilogram slipping from NOK 2.65 (USD 0.48, EUR 0.36) in 4Q 2011 to NOK -8.43 (USD -1.53, EUR -1.14) in 2012.
“In the Americas, the market situation is still concerning and Chilean costs continued to increase,” Aarskog said. “The Canadian business is starting to see cost benefits from the restructuring measures carried out. Whilst measurable operational improvements were observed in Scotland during the quarter, the results remained negatively impacted by biological events during the previous quarters."
